Direct production costs

How these costs are apportioned will depend on the Company s accounting methods. They would add about 20 to 30 per cent to direct production costs at the site. 

Direct production costs A + B 13. Sales expense 14. General overheads 15. Research and development 20-30 per cent of the direct production cost... 

From what we know today, crystalline silicon-based technology has the capability to continue to follow the established price experience curve, with direct production costs expected to achieve significant reduction to around 1.00 in 2013 and 0.75 in 2020 and even lower in the long term. This is true for other technologies... 

To operate the chemical plant, some direct expenses must be sustained. Manufacturing costs are the expenses connected with the manufacturing operation of the process plant. These costs can be divided into direct production costs, fixed charges, plant overhead costs and general expenses. Direct manufacturing costs are expenses strongly associated with the manufacturing operations. 

Among direct production costs, we can list raw materials, utilities, direct operation labour, maintenance, catalysts, royalties, etc. In our case, solvents (THF and pressurised CO2), polymer, and active ingredient are needed on a daily basis. The corresponding quantities were determined using the process simulator, as described in paragraph 8.3.3. In this discussion, additional solvent (THF) losses are supposed to equal 5% of the total flow rate entering the... 

The plant supervisor/manager has no control over fixed operating costs, whereas he/she is held accountable for the variable costs. In addition to those costs incurred due to the construction of the plant and/or its operation, each plant, site or product is usually required to contribute towards the general operating expenses of the company. These expenses include general overheads, research and development costs, sales expenses, etc. Each company decides how these costs are apportioned, however as a general indication they may add 20-30% to the direct production costs at site. 

The chemical engineer (or cost engineer) must be certain to consider all possible factors when making a cost analysis. Fixed costs, direct production costs for raw materials, labor, maintenance, power, and utilities must all be included along with costs for plant and administrative overhead, distribution of the final products, and other miscellaneous items. 

An evaluation of the operating labor and utilities requirements of the process must be made before the total product cost can be estimated. Details for evaluating these direct production costs are given in Chap. 6 and Appendix B. The estimate of the total product cost for the manufacture of 15 million lb per year detergent, based on methods outlined in Chap. 6, is presented in Table 5. 

Each of the subdivided groups can be classified further as indicated in Chap. 6. For example, direct production costs can be broken down into costs for raw materials, labor, supervision, maintenance, supplies, power, utilities, laboratory charges, and royalties. 

All expenses directly connected with the manufacturing operation or the physical equipment of a process plant itself are included in the manufacturing costs. These expenses, as considered here, are divided into three classifications as follows (1) direct production costs, (2) fixed charges, and (3) plant-overhead... 

Direct production costs include expenses directly associated with the manufacturing operation. This type of cost involves expenditures for raw materials (including transportation, unloading, etc.,) direct operating labor supervisory and clerical labor directly connected with the manufacturing operation plant maintenance and repairs operating supplies power utilities royalties and catalysts. 

It should be recognized that some of the variable costs listed here as part of the direct production costs have an element of fixed cost in them. For instance, maintenance and repair decreases, but not directly, with production level because a maintenance and repair cost still occurs when the process plant is shut down. 

Solution. The break-even point (Fig. 6-3) occurs when the total annual product cost equals the total annual sales. The total annual product cost is the sum of the fixed costs (including fixed charges, overhead, and general expenses) and the direct production costs for n units per year. The total annual sales is the product of the number of units and the selling price per unit. Thus... 

I. Manufacturing cost = direct production costs + fixed charges + plant overhead costs A Direct production costs (about 60% of total product cost)... 

A process plant making 2000 tons per year of a product selling for 0.80 per lb has annual direct production costs of 2 million at 100 percent capacity and other fixed costs of 700,000. What is the fixed cost per pound at the break-even point If the selling price of the product is increased by 10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 34 percent of gross earnings ... 

To obtain reliable estimates of investment returns, it is necessary to make accurate predictions of profits and the required investment. To determine the profit, estimates must be made of direct production costs, fixed charges including depreciation, plant overhead costs, and general expenses. Profits may be expressed on a before-tax or after-tax basis, but the conditions should be indicated. Both working capital and fixed capital should be considered in determining the total investment ... 

Annual direct production costs for this process (with the exception of raw material and steam costs) plus costs for plant overhead, administration, office help, distribution, and contingencies are 480,000 per year. This 480,000 includes the cost of operating any vacuum equipment and is unchanged even if vacuum is not used in the process. 

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